Retail Sales Fall Unexpectedly In March

U.S. retail sales fell unexpectedly in March, delivering a setback to hopes that the economy's steep slide could be bottoming out.

The Commerce Department said Tuesday that retail sales dipped 1.1 percent in March. It was the biggest decline in three months and a much weaker showing than the 0.3 percent increase that analysts expected.

A big drop in auto sales led the overall slump in demand. Sales also plunged at clothing stores, appliance outlets and furniture stores.

Seasonal adjustments could partly explain the unexpectedly weak showing. The March 2008 performance had been boosted by an early Easter, while the holiday did not occur this year until April, delaying some shopping.

The government also said that wholesale prices dropped sharply last month as the cost of gasoline and other energy plummeted, fresh evidence that inflation appears to pose little threat to the economy.

The Labor Department reported Tuesday that the Producer Price Index, which measures price changes before they reach consumers, fell by 1.2 percent in March compared to analysts' expectations of no change.

The PPI increased 0.1 percent in February.

The report said gas prices plunged 13.1 percent, the steepest drop since December, while food prices fell 0.7 percent.

Excluding volatile food and energy prices, it says the PPI was unchanged, below analysts' forecasts of a 0.1 percent rise.

The overall economy, as measured by the gross domestic product, fell at an annual rate of 6.3 percent in the final quarter of last year, the biggest slide in a quarter-century led by the largest drop in consumer spending in 28 years. Consumer spending is closely watched because it accounts for about 70 percent of total economic activity.

The 1.1 percent drop in retail sales last month followed a revised 0.3 percent increase in February, originally reported as a 0.1 percent fall. Retail sales rose 1.9 percent in January, which followed six straight months of declines.
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For March, auto sales fell 2.3 percent, following a 3 percent drop in February. Auto sales in March were 23.5 percent below year-ago levels as automakers struggle through their deepest downturn in decades.

General Motors Corp. and Chrysler LLC have received billions of dollars of support from the government in recent months with the administration demanding more painful restructuring before the companies will get further bailout assistance.

Excluding autos, retail sales fell 0.9 percent after a 1 percent rise in February. That also was worse than analysts' forecasts of a flat reading for last month.

Sales at appliance stores fell 5.9 percent last month and furniture stores reported a 1.7 percent decline. Sales at specialty clothing stores fell 1.8 percent and dipped 0.2 percent at general merchandise stores.

Sales at gasoline stations fell 1.6 percent, while food and beverage stores saw one of the few increases for the month, a rise of 0.5 percent.